Startup Funding Espresso – Burn Multiple

Burn Multiple Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Burn rate is the amount of cash spent over and above the revenue received. It's typically calculated on a monthly basis. Burn multiple is a metric that calculates the capital efficiency of a startup. To calculate burn multiple divide the monthly burn rate by the net new ARR. It shows how much revenue your startup is generating vs dollars spent. The burn multiple shows the efficiency of the business unlike the CAC: LTV ratio which measures just sales and marketing. In most startups raising venture capital the burn multiple ranges from 1X to 3X. Anything below 1x is fantastic. From 1x to 2x is good 2x to 3x is a problem Over 3x is a major problem. Very early-stage companies may have a 3X burn rate because the revenue hasn't come up yet. At Series A many companies have a 2X multiple. At Series B the burn multiple should drop down to 1X or less. At break even, the burn rate multiple will drop to 0. Check the burn multiple of startups in your portfolio to see if they are tracking for their stage. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let's go startup something today. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Investors check out: https://tencapital.group/investor-landing/ For Startups check out: https://tencapital.group/company-landing/ For eGuides check out: https://tencapital.group/education/ For upcoming Events, check out https://tencapital.group/events/ For Feedback please contact [email protected] Please follow, share, and leave a review. Music courtesy of Bensound.